It’s time for the EU to do less, but to do it better

Writing exclusively for Endeavour Public Affairs, Martin Callanan MEP hopes that following a summer with many days enjoyed in front of the Olympics, our refreshed leaders will come back to Brussels finally willing to take some tough decisions.

Summit after summit has failed to agree meaningful and long-term solutions to the euro zone crisis. I hope that, following a summer with many days enjoyed in front of the Olympics, our refreshed leaders will come back to Brussels finally willing to take some tough decisions.

So far, actions have focused on the short term: bailouts, cheap ECB money, moving debt from one balance sheet to the other, states propping up banks and banks propping up states. We cannot afford another six months of summitry which only serves to boost the economic fortunes of Brussels’ hotels.

There are many ideas being put forward to solve the crisis.
Most involve Germany in some way taking a ‘hit’, whether through inflationary measures, fiscal transfers or the introduction of a parallel currency that makes exports more expensive. Understandably, none of these ideas are palatable to the German people or their government. If I were a German politician I would be as dissatisfied as they are. If I were a Finnish taxpayer I would be asking why my government is being forced to surrender both my money and my country’s sovereignty because of some nations’ failure to make the kind of necessary economic reforms we had.

Likewise, if I were from Spain or Italy – both proud countries with much to be proud of – I would be incensed that the EU does not trust us to resolve our own economic problems and set our own budgetary policy. As an admirer of Germanic fiscal discipline, I believe that countries should not exceed their means. However, the wider impact on national democracy, and the breakdown of the social contract between the government and the governed, should be a major cause of concern.

The EU faces the ultimate paradox of the immovable object and the irresistible force. With good reason, neither side wants to compromise, despite a great deal of apparent willingness not to see the political ‘project’ fail.

As an MEP from a country whose people forced their government to remain out of the euro (despite their best efforts to take the UK in), I nevertheless do not want to see it collapse in an uncontrolled manner. However, I also fear that the lack of action and the constant stopgap ‘solutions’ are creating sclerosis across the entire European economy, including those countries that chose to remain outside the single currency. Lost competitiveness for all 27 member states is surely the overriding crisis that we face.

Every day that we spend tackling the euro crisis is another day when we have failed to tackle that underlying competitiveness crisis. The EU needs to take a cold, hard look at the policies of the past fifty years and ask whether it really has the solutions, or whether it is in fact part of the problem. Strangely enough, there is near universal agreement in the European Parliament that we need economic growth and jobs. However, ask how we achieve them and you will probably hear dozens of conflicting points of view.

Socialists would say that we need the government to ‘invest’ more in creating growth and jobs. Of course, this simply means borrowing more money that we do not have and pumping it into the economy to create artificial Keynesian growth: a policy that recent events have discredited.

The Christian Democrats want to see more EU intervention to create jobs with a substantially increased EU budget, more red tape in our labour markets, and punitive regulation of our banking industry.

My group wants to see the EU help stimulate solid entrepreneur-led growth in two ways: firstly, supporting the Single Market for goods, services, research, energy and the digital economy; and secondly, to get out of businesses’ way by slashing red tape, freeing up international trade, restoring flexibility to labour markets, and improving small businesses’ access to capital through a well-regulated but vibrant financial sector.

The biggest obstacle to growth is the misdirected view that only the state or the EU can create it. We see this naive viewpoint conveyed in the on-going debate over the size and shape of the EU’s future budget framework.

The commission will argue repeatedly in coming months that growth requires a bigger MFF budget with the carte blanche of new ‘Own Resources’. It really doesn’t. The commission is literally outlawing Keynesianism within the member states, yet it is still practicing it itself.

The forthcoming debate over the future of the budget will be a proxy for the debate over the future direction of the EU. Do we want the EU to do less but do it better, or do we believe that only ‘more Europe’ is the answer to every problem? The latter has led us into this quagmire. It’s time we embrace the former.

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